Tuesday, 4 December 2012

James Crosby - driven by greed

The first lesson any successful business learns is that it's not about turnover, it's about profit margin. No matter how great the sales figure, if you're losing money you've got it wrong. The chart engraved in our brains from microeconomics 101 on which the marginal cost curve meets the marginal revenue curve and magically reveals the point of maximum profit has served many successful businesses well. Except, of course, the really big ones.When you're very big, it's not about profit margin, it's about turnover. Poor profits can be disguised by a spiralling sequence of mergers and acquisitions, and of course the bigger you get, the more that greedy executives can cream off in salary and bonus; "Yes, I'm paid £5m a year, but that's only a tiny fraction of a percent of our turnover, you know .."

Amazon don't make profit because they're acquiring market share instead, using coercive means to lock-in consumers to their products. As do Apple. The wise avoid them, adopting open platform gadgets instead. Coercion by technical block is not a sustainable business model, as Microsoft found. But banks aren't consumer technology retailers - the global financial market is free and open, and banks only establish market share if they're fundamentally sound, i.e. profitable.

James Crosby, like Fred Goodwin, drove a bank into the ground because he was greedy. He admitted incompetence to a Commons committee, but it was far more than that. Like many others, I can't understand why Crosby isn't now in prison, rather than enjoying a pension of £570,000 a year, a reward of such obscenity that it defies rational understanding.

Look at it in a different light.....The banks and various other companies are recipients of state welfare benefits.Virgin health, and their offshoots, enjoy long contracts at good prices to perform, at greater cost in the long term, what was performed in the past by dedicated state-owned-and-operated units.Further, they are located "offshore" to enjoy low, or no, taxation.The same for many other "companies" that enjoy the largesse of the state while enjoying the benefit of not paying any taxes on their profits. In other words, they do not compete with others for the WORK because the others bidding have to factor in lower profits due to taxation (etc). So the companies based here, and taxed here, will always be at a disadvantage compared to those that hide in small islands..In other words, those companies are benefit cheats as well.To the tune of several tens of billions (compared to the 3 billion in benefit overpayment AND fraud).And that is before we look at the PFI scandal, set to cost US several HUNDRED billions over period (initiated by a conservative government, shackling future governments into long contracts) (and continued by labour, never ones to let a long-term-high-cost idea go to waste)Single person benefit cheat = badLarge company benefit cheat = ok (as long as my mates are getting rich and laid)

I have to echo Weekend Yachtsman. You must be a teenager imbibing the Morning Star Kool-Aid. Clearly you've never waited 6 weeks to get a new telephone. And don't get me started on the fucking gas board.

"Clearly you are too young to remember British Railways, British Steel, Post Office Telephones, and the Austin Allegro"

Yes I do.Good examples of poor management.Nothing says they would not have been better owned by the state and operated by trained managers who knew what they were doing.British Railways, which used to be privatelyyowned, is now called Network Rail, taken from the private sector and given to nobody (statutory corporation).....and not because it was well run, I'm sure.Personally, I'd rather the companies I use do not exist in south seas islands, or channel islands, to avoid taxation. As I said....not a level playing field is it.. ?So I don't use starbucks, or amazon....my choice.I may have no choice as to medicalprovider, since all the services are being given to the same off-shore tax-avoiders anyway. Although I note that all the doctors supposedly employed by virgin health resigned en-masse...Still, such is life.

I wonder if anonymous remembers the internally-generated collapse of such thrusting, entrepreneurial private companies as:BSA, Enterprise Ferries, Jarvis or GEC.All brought down by their own short-sighted incompetence & greed?

With roughly 50% of GDP spent by the state we are hardly a model of free enterprise in the UK. Sooner or later most businesses here depend on the state, even if once or twice removed. Consequently it is fairer to describe our economy as essentially corporatist.

The state is itself a monopoly (by its nature) and prioritises political goals above service to the immediate customer in businesses it runs or those critically dependent on the state (as in 'government will only buy from firms that use green energy/employ more women/whatever political flavour of the month'). No business can serve two masters.

Hence all state run businesses end in incompetence, corruption, inefficiency and lousy customer service. Unfortunately the banks were run hand in glove with Gordon Brown, praised by him, and eventually suffered their downfall because of his policies. Their management actually trusted a politician's account of the economy. Unbelievable.

Budgie:Hence all state run businesses end in incompetence, corruption, inefficiency and lousy customer service. Like the original CTRL works from Waterloo to Ashford, when the guvmint wouldn't build a high-speed link ...Done by inefficient horribloe NATIONALISED British Rail .. Under time & under budget. Oops.I trust your supposed argument does not apply to the (remains of) the Royal Navy?I note that rabid so-called "free marketeers" never apply their supposed logic to the armed services - this gaping fallacy is common in the USSA, as well.

You look at a company and see that it employs people, being a nice caring lefty, you see that as a good, and it is. But then you appear to draw the conclusion that company must carry on employing people for ever, nor does it matter if it doesn't produce stuff folk wants to buy, anymore.

So, by that token, we all ought to pop down to the local cartwright and make sure we keep him in the manner he expects, buying a few cartwheels, or the blacksmith for a couple of horse shoes.

How many cartwheels can you store in your back yard, Mr Tingey?

No, that'd be silly. A man doesn't need more than one spare wheel for his cart.

However, now that we aren't buying cartwheels, we've got spare cash to buy cars, or Ipods, or you know, whatever you want.

Which truly free enterprise system are you thinking about ?Ours ?Like the banks and their hundreds of billions of propping-up ?Defence companies with their ridiculous prices for inadequate equipment ?Airbus ?Most, if not all, of the "private health providers" ?Not to mention the excessive terms operated on the scandalous "Private Finance Initiative"Doctors ? (mine has just announced that from now all physiotherapy will not be available on the NHS)Maybe you would like to check the availability of free prescriptions on the NHS since the healthcare bill was passed ?As soon as the clinical commissioning Groups start some will see free prescriptions departing down the road....especially for expensive drugs or appliances..No such thing as a "true" free enterprise system.The whole shoddy business is subsidised one way or the other.

There has never been a free enterprise system since governments were formed.So, arguably, there has never been such a system.ANY system that does work for a government cannot be free enterprise.A free enterprise system can only be so if it operates without a governing framework of legislation.Given that business has been seen to operate outside our existing legislative framework (see "blacklisting") often, if not always, I doubt that free enterprise is capable of existing.Let's see it exist outside the framework of a limited company. Those that do are probably the closest thing we have to "free enterprise"